What is the situation and why am I thinking it is an adverse selection event if anyone offers to write credits for the Land of Lincoln members.

Land of Lincoln was a Co-Op. It was placed under state oversight in July. It’s reserves had gotten too low due to a higher than expected risk adjustment bill and no compensating risk corridor asset. Coverage for people on the individual market will terminate on 9/30/16. That means people will be running without coverage from October 1 to December 31.

New York had a similar experience in 2015 when Health Republic was liquidated in the fall of 2015.

Normally regulators would prefer to allow an insurer under oversight to run until the next open enrollment period. That would allow their members to have continuous coverage with the least amount of disruption and added stress. However Land of Lincoln and Health Republic could not make it to the end of the current policy year. Instead, they ended mid-contract. This triggers a Special Enrollment Period as the members lost coverage due to no fault of their own.

That is now not the case in Illinois. Blue Cross and Blue Shield is refusing to enter into a voluntary arrangement to credit deductible and out of pocket spending for any new policies it rights for any qualifying event. That is their right to do so. However, their refusal to do so pretty much forces every other Illinois insurer to also refuse to extend deductible credits.

Adverse selection is the cause of this race to mutually assured ugliness.

A closer look at Centene’s much-heralded success reveals that competition between insurers on the ObamaCare exchanges has become toxic. Rather than being a boon to consumers looking for a good deal, competition is hurting the very people it is supposed to help…

Yet the fallout was entirely predictable. Although subsidies are pegged to the premium of the second-lowest-cost silver plan in each market, Centene has been scrunching down its silver premiums by making the plans more bronzelike…. That in turns shrinks the government subsidies that are supposed to help make coverage affordable. If customers can’t afford, or don’t like, the cheap Centene silver plans on offer, they’ll have less of a subsidy to buy a bronze plan or a silver plan from a competitor.

In the largest HealthCare.gov market in 37 states, the second cheapest silver plan costs, on average, 27% more than the cheapest bronze plan this year. But in Mississippi, where Centene’s Ambetter brand is the low-cost provider, the gap between bronze and silver is only 12.6% in 2016, down from 34.8% in 2015.

Ambetter/Centene has adapted a Silver spam strategy that has been a hobby horse of mine for a while. The goal is to proliferate a bunch of plans tightly clustered around the subsidy benchmark point. For markets where all insurers are paying near commercial rates, this is not a big deal. In markets where one insurer is paying Medicaid plus something or Medicare like rates and everyone else is paying commercial rates to providers, this is a big deal. It forces heavily subsidized buyers to choose between half a dozen affordable plans that are functionally similar from the same insurer or not really be able to afford a choice.

This is due to the lack of good meaningful difference regulation. Currently Meaingful Difference regulation is a farce.Read more →

Arkansas officials should consider transferring more high-cost enrollees from the private option to the traditional, fee-for-service Medicaid program, a sponsor of the law that created the program said Monday.

At a meeting of the Health Reform Legislative Task Force, Senate President Pro Tempore Jonathan Dismang, R-Searcy, said he’s concerned that health care costs of some enrollees are increasing the cost of coverage for others in the state’s individual insurance market.

The basic mechanics of this plan would be to shift more of the expensive, high utilizing and not too healthy members from the Arkansas Private Option subsidized on-Exchange risk pool that pays providers commercial rates to the legacy Medicaid program where providers are paid (in Arkansas) about half the commercial rate. The goal is to reduce Arkansas’ state contribution to Medicaid expansion by effectively making the Expansion eligible individuals in the Legacy Medicaid pool an effective and well funded low income high risk pool while dumping all of the good risk into the private option pool to minimize nominal premium increases on Exchange.

The simpler thing to do in general would have been a general expansion with new ID cards and little else, but that will not pass in Arkansas so we get this policy tweak that actually solves a problem and probably makes everyone but the providers no worse off if not a bit better off.

Governor Pence pushed for the Healthy Indiana Plan v2. (HIP 2.0) to expand Medicaid. It is a convoluted bastard of conservative pet rocks and hoop jumping but it actually does cover most of the people who need to be covered by Medicaid Expansion.

It is also not an immediately disqualifying event for Governor Pence to be elevated to a national ticket.

This is how policies get entrenched even as a party bitches about them.

The quick consensus is that complete and utter bullshit claims that restricting abortion access through running providers through the ringer are under serious threat. The Ginsburg concurrence hints that TRAAP laws (Targeted Regulation Against Abortion Providers) should be assumed to be unconstitutional. The longer term policy and advocacy goal should be to have a standard in place that anything that treats abortion providers differently than providers of other services of roughly similar risk (mole removal for instance) is an unconstitutional burden.

Kentucky submitted their Medicaid Expansion waiver today. and it is a doozy. There are a couple of interesting and potentially useful nuggets ( I liked the wrap-around policies so that a family that qualifies for multiple categories of aid stay on one plan for simplicity’s sake), a couple of things that I could live with but don’t like and then work requirements tied to health insurance which CMS has always shot down.

Below is a pair of screen shots from the cost justification section of the waiver that I found utterly fascinating. The top shot is what the state projects will be the enrollment and cost per person per month (PMPM) growth without the waiver. The bottom is what the state projects would happen to enrollment and costs with the waiver. The 1115 waiver is supposed to be at least budget neutral and coverage neutral.

Early evidence suggests that the Affordable Care Act is working — at least in one important respect, according to researchers at the Federal Reserve Bank of New York.

Analysts Nicole Dussault, Maxim Pinkovskiy, and Basit Zafar state that the primary purpose of this law “is not to protect our health per se, but to protect our finances.” And they’ve found a big difference between indebtedness trends in states that embraced the Medicaid expansion versus the ones that did not…

U.S. counties that had a particularly high uninsured rate prior to the implementation of the Affordable Care Act have seen the per capita collection balance fall if their state embraced the Medicaid expansion. If not, the collection balance continued to climb:

The core of the plan is a $2,500 tax credit that any citizen would be eligible for and use to purchase health insurance. The lawmakers say this gives flexibility to people, whether they get employer-based insurance or not, to more directly control their healthcare spending, for example by using a health savings account.

every American citizen is eligible to claim a $2,500 tax benefit as well as a $1,500 tax benefit per dependent minor. This benefit can be assigned to an employer, transferred to a Roth Health Savings Account, or advanced for annual distribution. With this benefit, individuals and families now have the freedom to use pretax dollars to plan and save for their health care futures.

Let’s look at the distributional consequences of this type of policy.

For people who make under 200% of FPL, pre-tax dollars aren’t too valuable as most of their dollars are minimally taxed. For people making six figures and only have a kid or two at most, pre-tax dollars are fairly valuable as they are facing a much higher explicit marginal rate. Worrying about pre-tax dollars is overwhelmingly an upper middle class to affluent problem.

More importantly it is the flat subsidy.

$208 a month is a decent subsidy. In some regions that will buy the equivalent of a Silver plan with absolutely no out of pocket monthly premium. That is fine for a healthy and young individual (as underwriting is back with a vengeance). There are Silver plans for 40 year old non-smokers that cost under $200. However, that same $200 a month Silver plan with a $3,500 deductible will cost a 63 year old $450 a month. And odds are that 63 year old will need to use their policy a lot more than the 40 year old.

Furthermore, a flat subsidy is great for people who don’t need help. I get my insurance through my employer and the visible premium payment is roughly two hours of pay per month for a Platinum like coverage for my family. I don’t need help. My family does not need help. We already have access to good, high actuarial value, affordable coverage.

Families and individuals that are not mid-career professionals and are making under median income will see a far higher percentage of their income go to post-subsidy premiums. The poorer you are, the higher the premium percentage is for a given level of individual risk. And that is a major problem as the people who should bear the least risk are the one’s with the fewest available resources to mobilize in an oh-shit scenario.